1. John Husing, Ph.D. Economics & Politics, Inc. Chief Economist, IEEP
At Last, Inland Empire Economic Growth . . .
Will it Take Off?
John Husing, Ph.D.
Economics & Politics, Inc.
Chief Economist, IEEP

2. After Losing 8.74 Million Jobs … U.S. Job Creation Is Crawling Back

3. Pattern of Likely Recoveryx x  V U

4. Congressional Madness

5. Sequester
Debt Limit
U.S. Economy???

6. California Wage & Salary Employment Back to Mid-1999 Level
Every Wage & Salary Job Created In California In This Decade Has been Lost: Not A State Priority

7. Worst National Unemployment Rate Unadjusted Rates: U.S. 7.4% CA 9.6%

8. There is Some Good News Locally

9. IE Up 16,106 Jobs in 2012 thru November 16,300 was Husing Forecast for 2012
-146,400
-11.4%

10. Sectors Creating/Losing Jobs
Lower Paying
Modest Paying White Collar
Blue Collar
Good Paying
Exhibit 8.-Inland Empire Growing & Declining Sectors
Average January-November
5,164
3,055
(518)
(2,609)
Admin. Support
Health Care
Financial Activities
K-12 Education
4,691
1,127
(464)
Distribution & Transportation
Manufacturing
Construction
Employment Agcy
3,782
Eating & Drinking
1,545
1,100
(673)
Mgmt & Professions
Local Government
Federal & State
(1,473)
Accommodation
1,000
Social Assistance
855
Amusement
609
Agriculture
155
Utilities 64
Mining 9
Higher Education
(9)
Publish, telecomm, Other
(55)
Other Services
(473)
Retail Trade
(773)
Source: California Employment Development Department

11. The Great Challenge

12. Construction Share of Lost Jobs
Inland Empire,
130,200
57.3%
74,600
Total Job Decline
Construction Job Decline
Construction Share of Lost Jobs
Source: CA Employment Development Department

13. 500,000 People In SB County Underwater homes

14. Existing Home Prices Slight Upward Move
$437,200
Exhibit 5.-Price Trends, New & Existing Homes
Inland Empire, , Quarterly
$450,000
$295,442
$420,000
$390,000
New
Existing
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$360,000
$330,000
$300,000
$107, %
$389,924
$270,000
$240,000
-51.8%
$210,000
$180,000
$150,000
$120,000
$90,000
$187,825
$60,000
$155,319
$30,000 $0
2012
Source: Dataquick & Economics & Politics, Inc.

15. Inland Empire’s Long Term Price Competitive Advantage Still Exists
Exhibit 20.-Home Price Advantage, Inland Empire & So. California
Median Priced New & Existing Home, 3rd Quarter 2012
Median All Home Price
Inland Empire Advantage
$521,000
$384,000
$352,000
$155,000
$187,000
$324,000
$197,000
Inland Empire
Los Angeles
San Diego
Orange
Source: Dataquick

16. Gap To Coastal Markets Getting Larger
Exhibit 27.-Gap Between Coastal & Inland County Prices
Existing & New Homes,
$350,000
$350,000
$325,000
Los Angeles
Orange
San Diego
$325,000
$300,000
$300,000
$275,000
$275,000
$250,000
$250,000
$225,000
$225,000
$200,000
$200,000
$175,000
$175,000
$150,000
$150,000
$125,000
$125,000
$100,000
$100,000
$75,000
$75,000
$50,000
$50,000
$25,000
$25,000 $0 $0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012 YTD
Source: Dataquick

17. Record Inland Housing Affordability Should Be Stimulating Demand

18. But Consumers Are Again Skeptical About The Near Term Future
100.0 = Normal

19. Home Sales Volume Down Slightly

20. Investor Pre-Market Buying
Exhibit 10.-Direct Investor Purchase of Foreclosure Sales
Inland Empire,
50%
50%
45%
45%
40%
40%
35%
35%
30%
30%
25%
25%
20%
20%
15%
15%
10%
10% 5% 5% 0% 0%
2007
2008
2009
2010
2011
2012
Source: Foreclosureradar.com

21. Investor Purchases By SB Co. Area
Exhibit 11.-Home Purchases By Absentee Owners
San Bernardino County, Second Quarter 2007 v. 2012
46.4%
44.7%
37.8%
31.5%
31.2%
23.4%
2007
2012
30.6%
14.7%
13.1%
13.1%
11.9%
9.3%
San Bdno Co. Unincorp.
Morongo Basin
Victor Valley
SB County
East Valley
Westend
Source: Dataquick

22. Single Family Rentals & Police Calls

23. How This Ends: A Housing Shortage
During 2008 thru 2012
California Population Grew by 993,624
106,230
9.35 per new person

24. When Underwater Homes Solved
Sep-13
1.7%
Mar-14
5.1%
Mar-15
12.7%
Apr-17
35.7%
Apr-18
50.0%
Jan-19
60.0%
Jul-20
78.8%
Nov-21
89.9%
Feb-23
95.2%
Mar-24
97.9%
Mar-25
98.9%

25. Assessed Valuation Finally Growing

26. Assessed Valuation, Slow Rise
-8.1%

27. Construction Permits At An Historic Low !

28. Construction Jobs: At the Bottom

29. Gold Mine Theory Secondary Tier Primary Tier Construction: Blue Collar
Health Care: White Collar
Logistics: Blue Collar
Manufacturing: Blue Collar

30. Adult Educational Levels
31.4%
Rest of So. CA

31. Health Care Jobs ,

32. Inland Empire Underserved by Health Care Workers
34.4% More People Per Health Care Worker
Exhibit 10.-Number of People Per Health Care Worker
Inland Empire & California,
47.5
45.9
46.5
45.7
Inland Empire
California
44.7
42.7
41.8
41.1
41.7
41.4
40.3
40.1
39.6
40.0
39.9
40.4
40.5
40.4
39.1
39.4
40.3
39.2
38.5
36.2
35.1
34.7
34.8
34.5
34.1
33.8
33.6
33.4
33.7
33.3
32.7
32.5
32.4
31.8
31.1
31.0
29.6
29.2
28.6
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: CA Employment Development Department

33. Who Will Health Care Workers Serve?

34. Inland Empire is Under-Officed
Office Space Per Capita & Per Local Job
Southern California Areas, 2010
19.0
41.7
45.4
51.7
Per Person
Per Job
5.0
16.0
18.2
23.4
Inland Empire
L.A. County
San Diego Co.
Sources: Grubb & Ellis, CA Employment Development Dept., CA Dept. of Finance

35. Office Occupations: Strong Growth Has Stopped

36. Logistics Flow of Goods

39. Imported Container Volume Returning
+19.2%
-25.4%

40. Record Export Container Volume
All Time Record

41. Inland Empire Logistics Jobs

43. Manufacturing Activity: Slowing

44. Manufacturing Jobs In Neutral

45. Gold Mine Theory
Secondary Tier
Primary Tier

46. Inland Empire’s In-migration From Coastal Counties Has Stopped
-15,538
Not Bringing Skills, Wealth, Income & Spending

47. Retail Sales, San Bernardino County
-$3.7 Billion
-6.0%

48. Retail Jobs Have Faltered

49. California Grabbing Money From Local Government … School Funding Cut
Jerry Brown’s Hand

50. Government Jobs

51. 2012 Better than 2011
Foreclosures A Continuing Issue
Complete Recovery ??
2012 Jobs
Growing As Expected
2013 Better Than 2012 IF Federal Issues Solved